(Reuters) – METEC is Ethiopia’s largest company — a sprawling military-run industrial conglomerate that has for years wielded significant influence in the economy and drawn suspicion from some that it is a vehicle for patronage by governing elites.
Since Prime Minister Abiy Ahmed took office in April and began pledging sweeping reforms — including curbing corruption — METEC has been under the microscope: the government canceled the company’s contracts to build sugar and fertilizer plants. In August, the government ousted METEC from its contract to supply turbines for the nearly $5 billion Grand Renaissance Dam, citing lengthy delays.
Over the past few days, Ethiopia’s attorney general Berhanu Tsegaye ordered the arrest of 29 current and former senior employees of METEC including the ex-head, Brigadier General Kinfe Dagnew, on suspicion of massive corruption. The attorney general said a months-long investigation had uncovered issues with procurement processes over the past six years involving more than $2 billion.
Here is information on the company:
METEC, which stands for Metals and Engineering Corporation, was set up in 2010.
It was established by government decree with an authorized capital of 10 billion Ethiopian birr — less than $400 million at the current exchange rate. It won a range of government contracts and grew quickly.
The conglomerate has 98 companies. Two of them manufacture military equipment. Dozens of others make civilian products including TVs, solar panels, trucks, construction machinery, plastic products and other goods.
METEC had more than 19,000 employees but it laid off 3,000 this year after the government fired it from several contracts.
Former Prime Minister Meles Zenawi, in power from 1991 until his death in 2012, saw the conglomerate as critical to the centrally-planned economy and to a program to transform the country of 105 million people into a middle-income state by 2025 through investments in infrastructure and manufacturing.
In 2011, the government awarded METEC contracts related to a dozen mega projects: the plan was for METEC to establish new industries and build factories and infrastructure before opening the companies up to private sector investment.
That has not happened.
In announcing the cancellation of METEC’s turbine contact for a huge dam near the Sudanese border, Abiy drew attention to METEC’s failure to deliver. “It is a project that was supposed to be completed within five years, but seven or eight years later not a single turbine is operational,” he said.
Two weeks after the new PM took office in early April, METEC’s CEO resigned after eight years.
Days later, the canceling began canceling some of METEC’s contracts, citing poor performance and delays.
In June, Abiy shuffled METEC’s board and appointed, among others, the widow of Meles.
The following month, Abiy presented a proposal to split METEC into two parts: the subsidiaries involved in manufacturing military goods would be managed by the Defence Ministry, while the rest would continue together as a renamed National Industrial Engineering Corporation.
The proposal is still under review by the cabinet.